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FINC 0300: Unit 2 - Working with Financial Statements, Taxes and Cash Flow Flashcards | StudBud
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FINC 0300: Unit 2 - Working with Financial Statements, Taxes and Cash Flow
FINC 0300: Unit 2 - Working with Financial Statements, Taxes and Cash Flow
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Answers
1
The market value of an asset is usually lower than its book value.
True
False
2
Give me
Money
Access
Peace
Love
3
Which of the following is included in the
Statement of Cash Flows
under operating activities?
Purchase of equipment
Issuance of shares
Dividends paid
Change in accounts receivable
4
Which ratio most directly helps investors assess valuation against book value?
Price-to-Earnings (P/E)
Return on Assets (ROA)
Gross Margin
Price-to-Book (P/B)
5
The 'Equity Multiplier' in Du Pont Analysis is calculated as:
Net Income ÷ Total Assets
Net Income ÷ Revenue
Revenue ÷ Average Total Assets
Total Assets ÷ Shareholders’ Equity
6
What is the formula for calculating the
Quick Ratio
?
(Current Assets - Inventory) ÷ Current Liabilities
Net Income ÷ Total Assets
Cash ÷ Total Liabilities
Revenue ÷ Average Total Assets
7
The Du Pont ROE model decomposes Return on Equity into which components?
Asset Turnover, Debt Ratio, Equity Multiplier
Profit Margin, Equity Turnover, Tax Shield
Net Margin, Return on Assets, Return on Sales
Profit Margin, Asset Turnover, Equity Multiplier
8
The half-year rule in CCA means a full year’s depreciation cannot be claimed in the first year.
True
False
9
Companies must use cash accounting for public financial reporting under GAAP/IFRS.
True
False
10
Which is NOT a limitation of financial ratio analysis?
No theory to determine ratio relevance
Differences in accounting methods
Universal applicability to conglomerates
Extraordinary events affecting results
11
Which tax rate is most relevant for incremental financial decisions?
Average Tax Rate
Marginal Tax Rate
Deferred Tax Rate
Effective Tax Rate
12
What I enjoy doing:
Travelling
Fashion
Sports
Cooking
13
The Net Profit Margin can never be greater than the Gross Profit Margin.
True
False
14
Which of the following is a
leverage ratio
?
Debt-to-Equity Ratio
Current Ratio
Return on Assets
Inventory Turnover
15
Which financial statement best reflects a company's liquidity position at a specific point in time?
Statement of Financial Position
Income Statement
Statement of Cash Flows
Statement of Changes in Equity
16
Which ratio measures a company’s ability to cover short-term liabilities using only the most liquid assets?
Operating Cash Flow Ratio
Quick Ratio
Cash Ratio
Current Ratio
17
The Statement of Comprehensive Income captures financial data at a single point in time.
False
True
18
Liquidity ratios like the quick ratio exclude inventory from current assets.
True
False
19
What is the impact of high financial leverage on ROE?
Increases ROE if profits are positive
Increases interest coverage ratio
Has no effect on ROE
Decreases ROE
